UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of: NOVEMBER , 2003.
IMA EXPLORATION INC.
--------------------------------------------------------------------------------
(Translation of registrant's name into English)
#709 - 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, Canada
--------------------------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
Form 20-F [ X ] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [ X ]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
IMA Exploration Inc.
-------------------------------------
(Registrant)
Date: November 28, 2003 By /s/ William Lee
------------------------------ -------------------------------------
William Lee, Director and
Chief Financial Officer
BC FORM 51-901F
QUARTERLY REPORT
Incorporated as part of: X Schedule A
-------------
X Schedules B & C
-------------
(place x in appropriate category)
ISSUER DETAILS:
NAME OF ISSUER IMA EXPLORATION INC.
--------------------------------------------
ISSUER ADDRESS #709 - 837 WEST HASTINGS STREET
VANCOUVER, BC V6C 3N6
--------------------------------------------
ISSUER TELEPHONE NUMBER (604) 687-1828
--------------------------------------------
ISSUER FAX NUMBER (604) 687-1858
--------------------------------------------
CONTACT PERSON MR. NIKO CACOS
--------------------------------------------
CONTACT'S POSITION CORPORATE SECRETARY
--------------------------------------------
CONTACT'S TELEPHONE NUMBER (604) 687-1828
--------------------------------------------
CONTACT'S E-MAIL ADDRESS info@imaexploration.com
--------------------------------------------
WEBSITE www.imaexploration.com
--------------------------------------------
FOR QUARTER ENDED SEPTEMBER 30, 2003
--------------------------------------------
DATE OF REPORT NOVEMBER 28, 2003
--------------------------------------------
CERTIFICATE
-------------
THE THREE SCHEDULE(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED
AND THE DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF
DIRECTORS. A COPY OF THIS REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO
REQUESTS IT.
JOSEPH GROSSO /s/ Joseph Grosso 03/11/28
------------------ --------------------------- -------------------------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
WILLIAM LEE /s/ William Lee 03/11/28
------------------ --------------------------- -------------------------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
BC FORM 51-901F SCHEDULE A
--------------------------------------------------------------------------------
IMA EXPLORATION INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2003 and 2002
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited - Prepared by Management)
September 30, December 31,
2003 2002
$ $
(Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents 4,346,295 1,436,124
Amounts receivable and prepaids 130,175 79,661
Marketable securities (Note 3) 273,460 23,460
------------ ------------
4,749,930 1,539,245
PROPERTY, PLANT AND EQUIPMENT 42,398 45,517
MINERAL PROPERTIES AND DEFERRED COSTS (Note 4) 7,214,347 5,847,727
------------ ------------
12,006,675 7,432,489
============ ============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 123,492 108,351
------------ ------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 6) 26,860,402 21,354,823
CONTRIBUTED SURPLUS 461,646 128,260
DEFICIT (15,438,865) (14,158,945)
------------ ------------
11,883,183 7,324,138
------------ ------------
12,006,675 7,432,489
============ ============
APPROVED BY THE BOARD OF DIRECTORS
/s/ Joseph Grosso, Director
---------------------------
/s/ William Lee , Director
---------------------------
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
(Unaudited - Prepared by Management)
Three Months Ended Nine Months Ended
September 30, June 30,
----------------------------- ----------------------------
2003 2002 2003 2002
$ $ $ $
EXPENSES
Administrative and management services 64,300 55,160 181,450 171,575
Bank charges 1,731 1,151 7,700 6,488
Corporate development and investor relations 98,468 54,546 269,134 184,247
Costs associated with cancelled
financing (Note 6(b)) 94,610 - 94,610 -
Depreciation 5,546 4,892 16,638 14,676
General exploration 30,376 37,965 151,969 90,667
Office and sundry 17,401 6,652 43,434 24,952
Printing 29,329 1,694 44,011 19,629
Professional fees 47,734 36,016 96,000 104,585
Rent, parking and storage 13,557 18,680 40,663 54,482
Salaries and employee benefits 50,000 52,394 147,934 148,853
Stock based compensation (Note 5) 346,080 - 346,080 -
Telephone and utilities 9,039 11,279 28,845 24,598
Transfer agent and regulatory fees 7,075 6,452 42,420 33,208
Travel and accommodation 16,498 136 49,268 74,930
------------ ------------ ------------ ------------
LOSS BEFORE THE FOLLOWING (831,744) (287,017) (1,560,156) (952,890)
FOREIGN EXCHANGE 5,604 (6,501) 887 (15,963)
GAIN ON DISPOSITION OF MINERAL
PROPERTY AND DEFERRED COSTS 234,848 - 234,848 -
INTEREST AND OTHER INCOME 27,790 9,390 44,501 15,695
------------ ------------ ------------ ------------
LOSS FOR THE PERIOD (563,502) (284,128) (1,279,920) (953,158)
DEFICIT - BEGINNING OF PERIOD (14,875,363) (13,387,869) (14,158,945) (12,718,839)
------------ ------------ ------------ ------------
DEFICIT - END OF PERIOD (15,438,865) (13,671,997) (15,438,865) (13,671,997)
============ ============ ============ ============
BASIC AND DILUTED LOSS
PER COMMON SHARE $(0.02) $(0.01) $(0.04) $(0.04)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 34,278,040 25,048,704 31,082,130 22,055,463
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Prepared by Management)
Three Months Ended Nine Months Ended
September 30, June 30,
----------------------------- ----------------------------
2003 2002 2003 2002
$ $ $ $
OPERATING ACTIVITIES
Loss for the period (563,502) (284,128) (1,279,920) (953,158)
Items not involving cash
Depreciation 5,546 4,892 16,638 14,676
Gain on disposition of mineral properties
and deferred costs (234,848) - (234,848) -
Stock based compensation 346,080 - 346,080 -
------------ ------------ ------------ ------------
(446,724) (279,236) (1,152,050) (938,482)
Decrease (increase) in amounts
receivable and prepaids (40,868) 24,578 (50,514) 26,388
Increase (decrease) in accounts payable
and accrued liabilities 54,556 (41,543) 15,141 (74,887)
(433,036) (296,201) (1,187,423) (986,981)
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Proceeds from disposition of mineral
properties and deferred costs 108,665 - 108,665 -
Expenditures on mineral properties
and deferred costs (475,704) (227,265) (1,490,437) (938,465)
Purchase of equipment (3,078) (6,478) (13,519) (7,826)
------------ ------------ ------------ ------------
(370,117) (233,743) (1,395,291) (946,291)
------------ ------------ ------------ ------------
FINANCING ACTIVITIES
Issuance of common shares 1,088,943 912,935 5,667,686 3,453,383
Share issue costs (7,500) (31,823) (174,801) (189,056)
------------ ------------ ------------ ------------
1,081,443 881,112 5,492,885 3,264,327
------------ ------------ ------------ ------------
INCREASE IN CASH
AND CASH EQUIVALENTS 278,290 351,168 2,910,171 1,331,055
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 4,068,005 1,735,652 1,436,124 755,765
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD 4,346,295 2,086,820 4,346,295 2,086,820
============ ============ ============ ============
CASH AND CASH EQUIVALENTS COMPRISED OF:
Cash 1,546,295 1,281,951 1,546,295 1,281,951
Term deposits 2,800,000 804,869 2,800,000 804,869
------------ ------------ ------------ ------------
4,346,295 2,086,820 4,346,295 2,086,820
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
CONSOLIDATED SCHEDULE OF DEFERRED EXPLORATION COSTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
Argentina
-------------------------------------------------
Valle de
Cura Gualcamayo NW San Juan
---------- ---------- -----------------------
Other Other Mogote Other
$ $ $ $
Balance, beginning of period 1,879,040 16,240 68,514 33,317
---------- ---------- ---------- ----------
Expenditures during the period
Assays - - 7,823 -
Contractors - - 1,513 -
Drilling - - - -
Environmental - - - -
Field supplies - - 9,196 -
Field workers - - - -
Geological - - 47,823 -
Geological supplies - - 3,937 -
Geophysics - - - -
Geophysics supplies - - - -
Office - - 3,429 -
Other 2,928 1,499 2,648 221
Staking and statutory fees - - 841 2,881
Surveying - - - -
Travel - - 732 -
Vehicles - - 508 -
Disposition of property - - - -
Option payments received (94,803) - - -
---------- ---------- ---------- ----------
(91,875) 1,499 78,450 3,102
---------- ---------- ---------- ----------
Balance, end of period 1,787,165 17,739 146,964 36,419
========== ========== ========== ==========
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
CONSOLIDATED SCHEDULE OF DEFERRED EXPLORATION COSTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
Argentina Peru Total
-------------------------------------------------------------- ---------- ----------
Rio
Chubut Other Tabaconas
------------------------------------------------- ---------- ----------
Laguna de
Navidad La Bayas Los Toros Other
$ $ $ $ $ $ $
Balance, beginning of period 5,090 112,190 139,703 97,890 30,972 1,966,404 4,349,360
---------- ---------- ---------- ---------- ---------- ---------- ----------
Expenditures during the period
Assays 57,476 13,344 - 11,470 - 1,580 91,693
Contractors - 18,639 - - - 66,564 86,716
Drilling - 195,958 - - - - 195,958
Environmental 7,956 307 - - - 89,213 97,476
Field supplies 5,742 3,726 - 510 - 11,619 30,793
Field workers - - - - - 15,162 15,162
Geological 196,460 27,973 1,207 4,947 - - 278,410
Geological supplies 26,650 4,986 - 1,217 - 97,810 134,600
Geophysics 69,736 - - - - - 69,736
Geophysics supplies 30,299 - - - - - 30,299
Officer 9,798 2,637 359 2,012 - 12,896 31,131
Other 42,100 539 259 12,447 2,914 3,367 68,922
Staking and statutory fees 2,959 - - 90,874 - 50,100 147,655
Surveying 39,354 - - - - - 39,354
Travel 18,766 9,610 50 93 - 23,837 53,088
Vehicles 12,786 9,554 2 4,982 - 10,566 38,398
Disposition of property - - - (15,152) - - (15,152)
Option payments received - - - (13,862) - - (108,665)
---------- ---------- ---------- ---------- ---------- ---------- ----------
520,082 287,273 1,877 99,538 2,914 382,714 1,285,574
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, end of period 525,172 399,463 141,580 197,428 33,886 2,349,118 5,634,934
========== ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
1. NATURE OF OPERATIONS
The Company is in the process of exploring its mineral properties in South
America and evaluating other mineral properties. The Company presently has
no proven or probable reserves and on the basis of information to date, it
has not yet determined whether these properties contain economically
recoverable ore reserves. The amounts shown as mineral properties and
deferred costs represent costs incurred to date, less amounts amortized
and/or written off, and do not necessarily represent present or future
values. The underlying value of the mineral properties and deferred costs
is entirely dependent on the existence of economically recoverable
reserves, securing and maintaining title and beneficial interest in the
properties, the ability of the Company to obtain the necessary financing to
complete development, and future profitable production.
The Company considers that it has adequate resources to maintain its core
operations for the next year.
2. SIGNIFICANT ACCOUNTING POLICIES
The interim consolidated financial statements of the Company have been
prepared by management in accordance with Canadian generally accepted
accounting principles. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates. The consolidated
financial statements have, in management's opinion, been properly prepared
using careful judgement with reasonable limits of materiality. These
interim consolidated financial statements should be read in conjunction
with the most recent annual consolidated financial statements. The
significant accounting policies follow that of the most recently reported
annual consolidated financial statements.
3. MARKETABLE SECURITIES
September 30, 2003 December 31, 2002
------------------------ -------------------------
Quoted Quoted
Recorded Market Recorded Market
Value Value Value Value
$ $ $ $
Ballad Gold & Silver Ltd. - 500,000 common shares 250,000 305,000 - -
Other 23,460 121,211 23,460 78,200
----------- ----------- ------------ -----------
273,460 426,211 23,460 78,200
=========== =========== ============ ===========
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
4. MINERAL PROPERTIES AND DEFERRED COSTS
September 30, 2003 December 31, 2002
------------------------------------ ------------------------------------
Deferred Deferred
Acquisition Exploration Acquisition Exploration
Costs Costs Total Costs Costs Total
$ $ $ $ $ $
(see
schedule)
Argentina:
Valle de Cura 672,316 1,787,165 2,459,481 661,635 1,879,040 2,540,675
Gualcamayo 96,303 17,739 114,042 85,621 16,240 101,861
NW San Juan 66,667 183,383 250,050 51,065 101,831 152,896
Chubut - 1,263,643 1,263,643 - 354,873 354,873
Other - 33,886 33,886 - 30,972 30,972
---------- ---------- ---------- ---------- ---------- ----------
835,286 3,285,816 4,121,102 798,321 2,382,956 3,181,277
Peru:
Rio Tabaconas 744,127 2,349,118 3,093,245 700,046 1,966,404 2,666,450
---------- ---------- ---------- ---------- ---------- ----------
1,579,413 5,634,934 7,214,347 1,498,367 4,349,360 5,847,727
========== ========== ========== ========== ========== ==========
(a) During the nine months ended September 30, 2003, the Company entered
into agreements with Amera Resources Corporation ("Amera") to:
(i) farm out its Mogote Property in the NW San Juan Region of
Argentina to Amera, whereby Amera has the option to earn a 51%
interest in the 8,009 hectare Mogote Property by issuing a total
of 1,650,000 common shares of Amera to the Company and by
incurring US$1.25 million of expenditures, including work
programs and underlying option payments, all over a five year
period.
On September 30, 2003, the Company and Amera amended the terms of
the option whereby Amera has agreed to reimburse the Company, on
a non-refundable basis, $192,952 for payments made and
expenditures which had been incurred by the Company on the Mogote
Property; and
(ii) sell a 100% undivided interest in three mineral properties,
comprising 24,280 hectares (the "Chubut Properties"), located in
Chubut Province, Argentina, for 500,000 common shares of Amera.
In addition, in the event that a decision is made to place the
Chubut Properties into commercial production, Amera will pay the
Company a bonus of US$250,000 and a 3% net smelter returns
royalty.
Amera is a private company which is in the process of completing a
public offering. The president of Amera is also a director of the
Company. In addition, certain directors and officers of the Company
are also shareholders of Amera. Subsequent to September 30, 2003,
Amera received final regulatory approvals and has reimbursed the
Company the $192,952. Amera's initial public offering is expected to
be completed by December 1, 2003, at which time Amera will issue an
initial 600,000 shares to the Company.
(b) The Company has entered into an option agreement to farm out a minor
property acquired by the Company. The Company has received common
shares of publicly traded companies as partial consideration. See Note
3.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
5. STOCK BASED COMPENSATION
During the nine months ended September 30, 2003, the Company granted stock
options to its employees and directors to purchase up to 1,438,500 shares
of the Company. The Company has also granted stock options to consultants
to purchase up to 480,000 shares of the Company. The options are
exercisable at prices ranging from $0.84 per share to $1.87 per share and
have a 5 year term to expiry.
The Company has recognized compensation expense of $346,080 for the stock
options granted to consultants during the nine months ended September 30,
2003 which vested immediately.
As the Company did not adopt the fair value method of accounting for stock
options granted to employees and directors, Section 3870 requires
disclosure of pro forma amounts that reflect the impact as if the Company
had adopted the fair value based method of accounting. Had compensation
costs for the Company's stock options granted to employees and directors
been accounted for under the fair value method, the Company's net loss and
loss per share would have increased as follows:
$
Net loss for the period
- as reported (1,279,920)
- compensation expense (910,578)
----------
- pro-forma (2,190,498)
==========
Basic and diluted loss per common share
- as reported $(0.04)
- pro-forma $(0.07)
The fair value of stock options granted to employees and directors was
estimated on the date of grant using the Black-Scholes option pricing model
with the following assumptions used for the grants made during the period:
Risk-free interest rate 2.58% - 4.37%
Estimated volatility 60% - 104%
Expected life 2.5 years
The weighted average fair value per share of stock options, calculated
using the Black-Scholes option pricing model, granted during the period was
$0.63 per share.
Option-pricing models require the use of estimates and assumptions
including the expected volatility. Changes in the underlying assumptions
can materially affect the fair value estimates and therefore, existing
models do not necessarily provide reliable measure of the fair value of the
Company's stock options.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
6. SHARE CAPITAL
Authorized: 99,708,334 common shares without par value
Issued and allotted:
September 30, 2003 December 31, 2002
----------------------- -----------------------
Shares Amount Shares Amount
$ $
Balance, beginning of period 26,550,606 21,354,823 18,592,219 18,090,497
---------- ---------- ---------- ----------
Issued during the period for:
Private placements 2,900,000 2,610,000 5,703,026 2,552,870
Exercise of warrants 4,133,477 2,361,586 2,085,361 837,512
Exercise of options 1,474,750 638,774 170,000 68,000
Exercise of agent's option 77,800 70,020 - -
Less: Share issue costs - (174,801) - (194,056)
---------- ---------- ---------- ----------
8,586,027 5,505,579 7,958,387 3,264,326
---------- ---------- ---------- ----------
Balance, end of period 35,136,633 26,860,402 26,550,606 21,354,823
========== ========== ========== ==========
(a) During April 2003, the Company completed a brokered private placement
for 2,900,000 units at a price of $0.90 for cash proceeds of
$2,435,199, net of share issue costs of $174,801. Each unit consisted
of one common share of the Company and one-half non-transferable
common share purchase warrant. One whole warrant entitles the holder
to purchase one common share for the exercise price of $1.10 on or
before April 28, 2004. In addition, the Company granted the agent an
option to purchase 195,750 units on the same terms as the private
placement. Certain officers and directors of the Company have
purchased 445,000 units of the private placement. During the nine
months ended September 30, 2003, the Agent exercised options to
purchase 77,800 units.
(b) In September 2003, the Company agreed to conduct a brokered private
placement of 2 million units, at a price of $2.25, to raise $4.5
million. The financing was not completed. Accordingly, costs of
$94,610 associated with the financing have been charged to operations.
(c) Stock Options
A summary of the Company's outstanding stock options at September 30,
2003, and the changes for the nine months ended September 30, 2003, is
presented below:
Options Weighted
Outstanding Average
and Exercisable Exercise Price
$
Balance, beginning of period 2,465,500 0.44
Granted 1,918,500 1.60
Exercised (1,474,750) 0.42
----------
Balance, end of period 2,909,250 1.21
==========
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
6. SHARE CAPITAL (continued)
Stock options outstanding and exercisable at September 30, 2003, are
as follows:
Number Exercise Price Expiry Date
$
278,750 0.40 July 19, 2006
379,000 0.50 May 2, 2007
340,000 0.50 Sept. 23, 2007
216,500 0.84 March 7, 2008
300,000 0.90 May 30, 2008
1,395,000 1.87 Aug. 27, 2008
---------
2,909,250
=========
(c) Warrants
A summary of the number of common shares reserved pursuant to the
Company's outstanding warrants and agents warrants outstanding at
September 30, 2003, and the changes for the nine months ended
September 30, 2003, is as follows:
Number
Balance, beginning of period 9,511,550
Issued 1,488,900
Expired (3,001)
Exercised (4,133,477)
------------
Balance, end of period 6,863,972
============
Common shares reserved pursuant to warrants outstanding at September
30, 2003 are as follows:
Number Exercise Price Expiry Date
$
1,622,222 0.60 May 23, 2004
1,172,915 0.60 Sept. 27, 2004
1,268,489 0.75 Sept. 15, 2004
1,253,667 0.90 Mar. 16, 2005
173,667 0.75 Apr. 19, 2005
1,373,012 1.10 Apr. 28, 2004
6,863,972
(d) See also Note 11.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
7. RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2003, the Company:
(i) paid a total of $249,600 to officers and directors of the Company for
salaries, management and consulting services provided;
(ii) paid $45,693 for rent to a company owned by the President of the
Company and his wife; and
(iii) received $18,000 from Amera for shared rent and administration.
Other related party transactions are disclosed elsewhere in these interim
consolidated financial statements.
8. SEGMENTED INFORMATION
The Company's principal activities are the exploration of mineral
properties in Argentina and Peru. Management reviews the financial results
according to expenditures by property.
Segment assets by geographical location are as follows:
September 30, 2003
---------------------------------------------------
Canada Argentina Peru Total
$ $ $ $
Equipment 30,358 7,032 5,008 42,398
Mineral properties
and deferred costs - 4,121,102 3,093,245 7,214,347
---------- ---------- ---------- ----------
30,358 4,128,134 3,098,253 7,256,745
========== ========== ========== ==========
December 31, 2002
---------------------------------------------------
Canada Argentina Peru Total
$ $ $ $
Equipment 34,323 5,817 5,377 45,517
Mineral properties
and deferred costs - 3,181,277 2,666,450 5,847,727
---------- ---------- ---------- ----------
34,323 3,187,094 2,671,827 5,893,244
========== ========== ========== ==========
9. FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments consisting of cash
and cash equivalents, amounts receivable and accounts payable and accrued
liabilities approximate their carrying values. As of September 30, 2003,
the market value of marketable securities was $426,211.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited - Prepared by Management)
10. SUPPLEMENTARY CASH FLOW INFORMATION
During the nine months ended September 30, 2003, the Company:
i) received common shares of Ballad pursuant to a farm-out option
agreement, as described in Note 4, with a deemed cost of $250,000; and
ii) transferred $12,694 from contributed surplus to share capital on the
exercise of stock options.
Supplemental Cash flow information
September 30, September 30,
2003 2002
$ $
Interest paid in cash - -
========== ==========
Income taxes paid in cash - -
========== ==========
11. SUBSEQUENT EVENT
Subsequent to September 30, 2003, the Company issued 703,875 shares for
$463,368 on the exercises of stock options and warrants.
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
1.(a) GENERAL AND ADMINISTRATIVE EXPENSES
$
Administrative and management services 181,450
Bank charges and interest 7,700
Corporate development and investor relations 269,134
Depreciation 16,638
Office and sundry 43,434
Printing 44,011
Professional fees 96,000
Rent, parking and storage 40,663
Salaries and employee benefits 147,934
Telephone and utilities 28,845
Transfer agent and regulatory fees 42,420
Travel and accommodation 49,268
------------
967,497
============
1.(b) MINERAL PROPERTIES AND DEFERRED COSTS
See next page for consolidated schedule of mineral properties and
deferred costs.
1.(c) GENERAL EXPLORATION EXPENSES
$
Accounting services 10,814
Bank fees 9,672
Consulting 21,335
Insurance 12,066
Geological 44,246
Geological supplies 9,864
Legal 15,486
Office 10,392
Supplies 1,443
Travel 1,005
Vehicle 15,646
------------
151,969
============
2.(a) RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2003, the Company:
(i) paid a total of $249,600 to officers and directors of the Company
for salaries, management and consulting services provided;
(ii) paid $45,693 for rent to a company owned by the President of the
Company and his wife;
(iii) received $18,000 from Amera Resources Corporation ("Amera"), a
private company with a common director for shared rent and
administration;
(iv) entered into a number of agreements with Amera whereby the
Company agreed to option and sell certain of its mineral
properties to Amera. Details of the terms are described in Note 4
of the Company's interim consolidated financial statements; and
(v) conducted a private placement in which certain officers and
directors of the Company purchased 445,000 units for $400,500.
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
1.(b) MINERAL PROPERTIES AND DEFERRED COSTS FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2003
Argentina
-------------------------------------------------
Valle de
Cura Gualcamayo NW San Juan
---------- ---------- -----------------------
Other Other Mogote Other
$ $ $ $
Balance, beginning of period 2,540,675 101,861 107,940 44,956
---------- ---------- ---------- ----------
Option payments 10,681 10,682 15,602 -
---------- ---------- ---------- ----------
Expenditures during the period
Assays - - 7,823 -
Contractors - - 1,513 -
Drilling - - - -
Environmental - - - -
Field supplies - - 9,196 -
Field workers - - - -
Geological - - 47,823 -
Geological supplies - - 3,937 -
Geophysics - - - -
Geophysics supplies - - - -
Office - - 3,429 -
Other 2,928 1,499 2,648 221
Staking and statutory fees - - 841 2,881
Surveying - - - -
Travel - - 732 -
Vehicles - - 508 -
Disposition of property - - - -
Option payments received (94,803) - - -
---------- ---------- ---------- ----------
(91,875) 1,499 78,450 3,102
---------- ---------- ---------- ----------
Balance, end of period 2,459,481 114,042 201,992 48,058
========== ========== ========== ==========
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
1.(b) MINERAL PROPERTIES AND DEFERRED COSTS FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2003 (continued)
Argentina Peru Total
-------------------------------------------------------------- ---------- ----------
Rio
Chubut Other Tabaconas
------------------------------------------------- ---------- ----------
Laguna de
Navidad La Bayas Los Toros Other
$ $ $ $ $ $ $
Balance, beginning of period 5,090 112,190 139,703 97,890 30,972 2,666,450 5,847,727
---------- ---------- ---------- ---------- ---------- ---------- ----------
Option payments - - - - - 44,081 81,046
---------- ---------- ---------- ---------- ---------- ---------- ----------
Expenditures during the period
Assays 57,476 13,344 - 11,470 - 1,580 91,693
Contractors - 18,639 - - - 66,564 86,716
Drilling - 195,958 - - - - 195,958
Environmental 7,956 307 - - - 89,213 97,476
Field supplies 5,742 3,726 - 510 - 11,619 30,793
Field workers - - - - - 15,162 15,162
Geological 196,460 27,973 1,207 4,947 - - 278,410
Geological supplies 26,650 4,986 - 1,217 - 97,810 134,600
Geophysics 69,736 - - - - - 69,736
Geophysics supplies 30,299 - - - - - 30,299
Officer 9,798 2,637 359 2,012 - 12,896 31,131
Other 42,100 539 259 12,447 2,914 3,367 68,922
Staking and statutory fees 2,959 - - 90,874 - 50,100 147,655
Surveying 39,354 - - - - - 39,354
Travel 18,766 9,610 50 93 - 23,837 53,088
Vehicles 12,786 9,554 2 4,982 - 10,566 38,398
Disposition of property - - - (15,152) - - (15,152)
Option payments received - - - (13,862) - - (108,665)
---------- ---------- ---------- ---------- ---------- ---------- ----------
520,082 287,273 1,877 99,538 2,914 382,714 1,285,574
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, end of period 525,172 399,463 141,580 197,428 33,886 3,093,245 7,214,347
========== ========== ========== ========== ========== ========== ==========
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
3.(a) SECURITIES ISSUED DURING THE PERIOD ENDED SEPTEMBER 30, 2003
Date Type of Total Type of
of Issue Security Type of Issue Number Price Proceeds Consideration Commission
-------- -------- ------------- --------- ------- ----------- ------------- ----------
$ $ $
Jan. 2003 Common Warrants 13,500 0.45 6,075 Cash N/A
Feb. 2003 Common Options 10,000 0.40 4,000 Cash N/A
Feb. 2003 Common Warrants 400,000 0.45 180,000 Cash N/A
Feb. 2003 Common Warrants 112,015 0.54 60,488 Cash N/A
Mar. 2003 Common Options 25,000 0.40 10,000 Cash N/A
Mar. 2003 Common Warrants 2,000 0.75 1,500 Cash N/A
Mar. 2003 Common Warrants 11,111 0.53 5,889 Cash N/A
Mar. 2003 Common Warrants 1,330 0.50 665 Cash N/A
Mar. 2003 Common Warrants 1,206,500 0.45 542,926 Cash N/A
Mar. 2003 Common Warrants 527,343 0.54 284,765 Cash N/A
Mar. 2003 Common Warrants 60,000 0.55 33,000 Cash N/A
Apr. 2003 Common Private
placement 2,900,000 0.90 2,610,000 Cash $112,752
Apr. 2003 Common Options 142,000 0.40 56,800 Cash N/A
Apr. 2003 Common Options 160,000 0.50 80,000 Cash N/A
Apr. 2003 Common Warrants 275,725 0.54 148,892 Cash N/A
Apr. 2003 Common Warrants 5,000 0.75 3,750 Cash N/A
Apr. 2003 Common Warrants 100,000 0.53 53,000 Cash N/A
Apr. 2003 Common Warrants 40,000 0.55 22,000 Cash N/A
May 2003 Common Warrants 85,000 0.55 46,750 Cash N/A
May 2003 Common Warrants 55,555 0.53 29,444 Cash N/A
May 2003 Common Options 20,500 0.50 10,250 Cash N/A
May 2003 Common Options 4,250 0.40 1,700 Cash N/A
June 2003 Common Warrants 149,933 0.75 112,450 Cash N/A
June 2003 Common Warrants 25,000 0.55 13,750 Cash N/A
June 2003 Common Warrants 20,000 0.90 18,000 Cash N/A
June 2003 Common Options 70,500 0.50 35,250 Cash N/A
June 2003 Common Options 518,500 0.40 207,400 Cash N/A
July 2003 Common Warrants 30,000 0.90 27,000 Cash N/A
July 2003 Common Warrants 54,000 0.55 29,700 Cash N/A
July 2003 Common Warrants 501,434 0.75 376,076 Cash N/A
July 2003 Common Options 10,000 0.50 5,000 Cash N/A
July 2003 Common Options 100,000 0.40 40,000 Cash N/A
Aug. 2003 Common Warrants 93,500 0.90 84,150 Cash N/A
Aug. 2003 Common Warrants 69,477 0.75 52,108 Cash N/A
Aug. 2003 Common Warrants 55,000 0.55 30,250 Cash N/A
Aug. 2003 Common Warrants 18,468 0.50 9,234 Cash N/A
Aug. 2003 Common Warrants 5,888 1.10 6,477 Cash N/A
Aug. 2003 Common Options 14,400 0.40 5,760 Cash N/A
Sept. 2003 Common Warrants 25,000 0.75 18,750 Cash N/A
Sept. 2003 Common Warrants 17,698 0.50 8,849 Cash N/A
Sept. 2003 Common Warrants 110,000 1.10 121,000 Cash N/A
Sept. 2003 Common Warrants 63,000 0.55 34,650 Cash N/A
Sept. 2003 Common Options 322,600 0.40 129,040 Cash N/A
Sept. 2003 Common Options 70,000 0.50 35,000 Cash N/A
Sept. 2003 Common Options 7,000 0.84 5,880 Cash N/A
Sept. 2003 Common Agent's Options 77,800 0.90 70,020 Cash N/A
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
3.(b) OPTIONS GRANTED DURING THE PERIOD ENDED SEPTEMBER 30, 2003
Date Number Type Exercise
Granted of Shares of Option Name Price Expiry Date
------------ --------- --------- -------------- ----- ------------
$
Mar. 7, 2003 50,000 Employee K. Patterson 0.84 Mar. 7, 2008
Mar. 7, 2003 30,000 Employee D. Charchaflie 0.84 Mar. 7, 2008
Mar. 7, 2003 21,500 Employee J.C. Beretta 0.84 Mar. 7, 2008
Mar. 7, 2003 25,000 Employee M. Saldana 0.84 Mar. 7, 2008
Mar. 7, 2003 25,000 Employee N. Demare 0.84 Mar. 7, 2008
Mar. 7, 2003 50,000 Director W. Lee 0.84 Mar. 7, 2008
Mar. 7, 2003 15,000 Employee A. Sanchez 0.84 Mar. 7, 2008
Mar. 7, 2003 7,000 Employee M. Briones 0.84 Mar. 7, 2008
May 30, 2003 150,000 Director R. Angus 0.90 May 30, 2008
May 30, 2003 150,000 Director C. Idziszek 0.90 May 30, 2008
Aug. 27, 2003 200,000 Director J. Grosso 1.87 Aug. 27, 2003
Aug. 27, 2003 50,000 Director G. Carlson 1.87 Aug. 27, 2003
Aug. 27, 2003 100,000 Director S. Hurd 1.87 Aug. 27, 2003
Aug. 27, 2003 75,000 Director W. Lee 1.87 Aug. 27, 2003
Aug. 27, 2003 75,000 Director N. Cacos 1.87 Aug. 27, 2003
Aug. 27, 2003 50,000 Employee N. DeMare 1.87 Aug. 27, 2003
Aug. 27, 2003 30,000 Employee J.C. Berretta 1.87 Aug. 27, 2003
Aug. 27, 2003 5,000 Employee J. Denee 1.87 Aug. 27, 2003
Aug. 27, 2003 15,000 Employee D. Bussandri 1.87 Aug. 27, 2003
Aug. 27, 2003 15,000 Employee S. Kain 1.87 Aug. 27, 2003
Aug. 27, 2003 300,000 Employee S. Phillips 1.87 Aug. 27, 2003
Aug. 27, 2003 10,000 Consultant D. Charchaflie 1.87 Aug. 27, 2003
Aug. 27, 2003 220,000 Consultant C. D'Amico 1.87 Aug. 27, 2003
Aug. 27, 2003 50,000 Consultant R. Dragon 1.87 Aug. 27, 2003
Aug. 27, 2003 120,000 Consultant A. Colucci 1.87 Aug. 27, 2003
Aug. 27, 2003 15,000 Consultant L. Salley 1.87 Aug. 27, 2003
Aug. 27, 2003 30,000 Consultant P. Hedblom 1.87 Aug. 27, 2003
Aug. 27, 2003 25,000 Consultant J. Wong 1.87 Aug. 27, 2003
Aug. 27, 2003 10,000 Consultant M. Maksym 1.87 Aug. 27, 2003
4.(a) AUTHORIZED AND ISSUED SHARE CAPITAL AS AT JUNE 30, 2003
Issued
--------------------------------
Authorized
Class Par Value Number Number Amount
------ --------- ---------- ---------- -----------
Common WPV 99,708,334 35,136,633 $26,860,402
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
4.(b) OPTIONS AND WARRANTS OUTSTANDING AS AT SEPTEMBER 30, 2003
Exercise Expiry
Security Number Price Date
-------- --------- -------- --------------
$
Options 278,750 0.40 Jul. 19, 2006
Options 379,000 0.50 May 02, 2007
Options 340,000 0.50 Sept. 23, 2007
Options 216,500 0.84 Mar. 07,2008
Options 300,000 0.90 May 30, 2008
Options 1,395,000 1.87 Aug. 27, 2008
----------
2,909,250
==========
Warrants 1,268,489 0.75 Sept. 15, 2004
Warrants 173,667 0.75 Apr. 19, 2005
Warrants 1,253,667 0.90 Mar. 16, 2005
Warrants 1,622,222 0.60 May 23, 2004
Warrants 1,172,915 0.60 Sept. 27, 2004
Warrants 1,373,012 1.10 Apr. 28, 2004
----------
6,863,972
==========
Pursuant to the 2,900,000 unit brokered private placement financing, the
Company has granted an option to the agent to acquire 195,750 units at
$0.90 per unit. Each unit will consist of one common share and one-half
non-transferable common share purchase warrant. One whole warrant will
entitle the agent to purchase one common share for the exercise price of
$1.10 per share, on or before April 28, 2004. During the nine months
ended September 30, 2003, the agent exercised options to purchase 77,800
units.
4.(c) SHARES IN ESCROW OR SUBJECT TO POOLING AS AT SEPTEMBER 30, 2003
There were no shares subject to escrow or pooling as at September 30,
2003.
5.(a) LIST OF DIRECTORS AND OFFICERS AS AT SEPTEMBER 30, 2003
Directors: Officers:
Gerald D. Carlson Gerald D. Carlson (Chairman)
Joseph Grosso Joseph Grosso (President & CEO)
William Lee William Lee (CFO)
Sean Hurd Nikolaos Cacos (Secretary)
Robert Stuart (Tookie) Angus
Nikolaos Cacos
Chet Idziszek
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS
INTRODUCTION
The following management's discussion and analysis and financial review should
be read in conjunction with the Company's consolidated financial statements and
related notes.
OVERVIEW
The Company owns outright, or has the right to acquire through various option
agreements, interests in a number of exploration properties in Argentina and one
property in Peru.
The properties on which the Company has concentrated its exploration efforts
over the last few years are Navidad, Las Bayas, Mogote and Rio Tabaconas. The
Company has also acquired, through staking, interests in a number of properties
in Chubut. With its focus on the Navidad property, the Company is considering
farm-outs for some of its properties as a means by which exploration can be
conducted. Certain farm-out deals have been made on certain properties and are
discussed below.
On November 18,2003, the Company announced all required permits for drilling at
the Navidad property have been received and a drill contract has been awarded to
Connors Argentina, S.A. Construction of drill pads and improvement of trails to
allow access for drilling equipment is now underway and is expected to be
completed shortly. Phase I of the two-phase 6,000 metre diamond drill program
budgeted to cost approximately US$1.5 million, is now underway at Navidad Hill.
During the months of August and September, the Company carried out an extensive
market awareness program through numerous cities in Canada. On September 22,
2003 the Company announced that it had entered into an agreement with two
underwriters who had agreed to purchase , on a bought-deal basis, 2,000,000
units of the Company at a purchase price of $2.25 per unit, for a total proceeds
of $4.5 million to close on or about October 2, 2003.
On October 15, 2003 the Company announced that it had received notice that the
bought deal financing announced on September 22, 2003, would not be completed.
As previously announced, the financing was scheduled to close on October 2,
2003, the same date on which the Company received a letter from Aquiline
Resources Inc. ("Aquiline") requesting information on the history of the staking
of Navidad. In order to discuss the details of the letter with its financial
advisors, the Company was compelled to issue a news release on October 6, 2003
disclosing the Aquiline letter. This created some uncertainty in the market
conditions for the Company's shares that ultimately led to the cancellation of
the financing.
Aquiline's letter is exceptionally vague on substance. Aquiline has not
identified any specific confidential information at issue and has not made any
allegations that the Company has breached the confidentiality agreement
pertaining to the Calcatreu project which was reviewed and rejected by the
Company along with many other bidders.
Also on October 15,2003, the Company initiated a legal action in the Supreme
Court of British Columbia against Aquiline claiming damages, an injunction and
costs for injurious falsehood, interference with contractual relations,
interference with economic interests, defamation, and negligence arising out of
the Defendant's issuance and publication of a letter sent to the Company on the
same day that the Company was to have closed a bought deal financing.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
PROPERTY UPDATE
The Company's mineral property groups are Valle de Cura , Gualcamayo, NW San
Juan and Chubut in Argentina; and, Rio Tabaconas, in Peru. For the quarter ended
September 30,2003, the Company focused mainly in Argentina planning logistical
detals of the planned drill program at Navidad.
a) ARGENTINA
VALLE DE CURA
The Company has no exploration budget commitment for the Valle del Cura region
in Argentina as this group of properties is covered under the existing option
agreement with Barrick Gold Corp.
The selection notice period in the property option agreement between Barrick
Gold Corp. ("Barrick") and the Company was extended to December 31, 2003 to
allow Barrick's technical team to review additional properties of the Company.
In return for the extension, Barrick paid the Company US $65,000 in April 2003,
such funds will be utilized by the Company to fund holding costs of US $15,000
in July 2003 and US $50,000 in December 2003. No further work will be carried
out on these properties until after December 31, 2003 when Barrick makes its
election.
On September 22, 2003, the Company finalized terms for a farm-out of 10,000 ha
Gollette property located in the Valle de Cura region to Cloudbreak Resources
Ltd. ( "Cloudbreak" ), a public company listed on the Exchange. Under the terms
of the option agreement, Cloudbreak can earn up to a 50 % interest by funding US
$1,000,000 and issuing 850,000 shares over three years. Cloudbreak can increase
its interest to 75 % by funding US $1,000,000 in year 4, US $1,500,000 in year
5, issuing an additional 1,000,000 shares and providing a comprehensive report
on the results on the work performed up to the date of the report. Cloudbreak
will also make all underlying property holding costs to maintain the property in
good standing. Cloudbreak received Exchange Acceptance to the option agreement
on October 31, 2003 and will be issuing the initial 500,000 shares shortly.
GUALCAMAYO
The Company has no exploration budget commitment for the Gualcamayo region in
Argentina.
NW SAN JUAN
A small exploration program was completed at the Mogote property in the first
quarter of 2003. The Company has no further exploration budget committed for the
NW San Juan region.
The results of the exploration program were announced on March 20, 2003. The
work program was successful in that it expanded the gold-copper exploration
potential of the project. Mogote is a copper-gold porphyry target and is located
along the Argentina-Chile border in the Maricunga belt.
Detailed mapping, rock chip sampling, and talus-fines sampling have defined two
intersecting target areas which are defined by coincident >100 ppb gold and >500
ppm copper in talus-fines sampling and have been confirmed by rock chip
sampling. The target areas are Filo Central and Filo Este. Filo Central measures
4,000 metres by 800 metres and trends north-northwest; it includes two
higher-grade (>200 ppb gold) cores measuring 1,400 by 400 metres and 900 by 250
metres Filo Este is 2,000 metres by 700 metres in size and trends east-west;
within this zone a core of >200 ppb gold in talus fines measures 1,200 by 250
metres. The >100 ppb gold contour in talus fine sampling has been previously
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
used, with documented success, to define several large gold-copper deposits in
the Maricunga belt. Neither of these targets have been drill tested or trenched.
The exploration work at Mogote was carried out by Linus Keating, D.Sc. under the
supervision of Lindsay Bottomer, P.Geo., the Company's Qualified Person for the
project.
In February, the Company received an offer to joint venture the property from
Amera Resources Corporation ("Amera"). Amera has a common director with the
Company and accordingly an independent committee of the Board of Directors of
the Company was formed to negotiate and settle on the terms of the farm-out
agreement with Amera. After negotiations the Company entered into an agreement
to option this property to Amera, a private company which, as of August 8, 2003,
has filed a preliminary prospectus with the TSX Venture Exchange (the
"Exchange") and the BC Securities Commission. Amera has a common director with
the Company and the farm-out to Amera is also subject to Exchange approval.
Under the terms of the agreement, Amera can earn 51% interest by spending
US$1,250,000 in exploration and development expenditures on the property and
issuing 1,650,000 of its common shares to the Company in varying amounts over 5
years. Included in the expenditure commitment of Amera is an obligation to
reimburse the Company for all the expenditures it has incurred on the property.
Subsequent to September 30,2003, Amera received all necessary regulatory
approvals to complete the acquisition and file a final prospectus to complete an
initial public offering. As a result, the Company was reimbursed $192,952 as of
October 31,2003 and 100,000 shares will be issued to the Company shortly.
The Company has received notice from Amera of plans for continued exploration at
the Mogote Project. Plans include a program budgeted at CDN $ 275,000 which will
include: geological mapping, cat trenching, rock and talus samples, and a
significant geophysical survey. This program is currently underway.
CHUBUT
During late 2002 and early 2003, the Company staked a number of properties in
various areas of the province of Chubut. Some of the properties staked included
Costa, Lago, Pico, Corcovado, Loma Alto and Nueva Ruta properties. These
properties were staked in order to target geological environments prospective
for low sulphidation gold veins. Other properties staked included Penascudo and
Gan Gan and extensions to the previously staked Costa property. The Company also
has rights to other properties through various staking programs. The Company's
inventory of resource exploration properties in Chubut is an asset which is to
be developed through exploration programs or given the focus of exploration
efforts at Navidad through third party agreements.
On March 6, 2003, the Company entered into an agreement to sell a 100 %
undivided interest in Lago Pico (10,000 ha), Loma Alta (10,000 ha) and Nueva
Ruta (4,180 ha) to Amera. The terms of the agreement were approved by the
independent committee of the Company. Amera received approval from the Exchange
on November 3, 2003 and will be issuing 500,000 common shares to the Company. In
addition, in the event that a decision is made to place any of the properties
into commercial production, the Company will receive a bonus of US$250,000 and a
3 % net smelter return royalty.
On May 28, 2003, the Company granted Ballad Gold & Silver Ltd. ("Ballad"), a
public company listed on the Exchange, an exclusive right to enter into an
option agreement with the Company to earn up to 85 % interest in the Penascudo
property. This right was exercised by Ballad on August 12, 2003 and Ballad's
participation was approved on August 29, 2003 by the Exchange. For the initial
70% interest, Ballad must complete US $1,800,000 of exploration work by October
31, 2008, issue 500,000 shares to the Company and make a further US $300,000
cash payment and issue an additional 500,000 shares and complete a feasibility
study on or before October 31, 2008. The initial 500,000 shares were issued to
the Company on September 4, 2003. Ballad is an arm's length junior exploration
company.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
On August 27, 2003, the Company finalized terms for a farm-out of a 1,000
hectare Chubut property to Consolidated Pacific Bay Minerals ("Pacific Bay"), an
arm's length junior exploration company. Under the terms of the option
agreement, Pacific Bay can earn a 51% interest by funding US $625,000 of
exploration and issuing 900,000 shares. Pacific Bay's participation is subject
to acceptance for filing with the Exchange. Pacific Bay can increase its
interest to 70% by funding costs to prepare a feasibility study.
NAVIDAD PROJECT
On February 3, 2003 the Company announced the discovery of high-grade
silver-lead-copper mineralization on it's 100% owned Navidad Property in
north-central Chubut Province. The discovery at Navidad was the culmination of
an extensive and ongoing regional exploration program throughout southern
Argentina where the Company has been active since 1995. Since this discovery,
the Navidad Project has become the focus of the Company's exploration efforts.
Work performed to date includes detailed and property scale geological mapping,
rock chip sampling, soil sampling, a large gradient array induced polarization
(IP) geophysical survey, several lines of pole-dipole IP, a ground magnetic
survey, and a gravity survey. To September 30, 2003 approximately $520,082 has
been spent at the Navidad Project and has resulted in the delineation of
multiple drill targets.
Rock chip sampling and geologic mapping have defined three distinct yet related
styles of mineralization at the Navidad Project; namely "bonanza-grade
structures", "mineralized carapace breccia", and "galena matrix breccia" These
mineralization styles have been mapped along a linear ridge named "Navidad
Ridge" that is comprised of "Barite", "Galena", and "Navidad Hills". To date,
835 rock chip samples have been collected and analyzed. All primary analytical
work has been preformed by ALS Chemex using fire assay/gravimetric, AA (atomic
absorption) and ICP-MS (inductively coupled plasma - mass spectroscopy)
techniques as appropriate. 120 randomly selected samples (approximately 14% of
all samples) have been submitted for check assay to Alex Stewart (Assayers)
Argentina S.A.; results of these generally agree well with the original results
from ALS Chemex.
Dr. Paul Lhotka, P.Geo. has performed or directly supervised all exploration
work at the Navidad Project and is the Company's "Qualified Person" for the
project. Dr. Lhotka has prepared for the Company a NI 43-101 report dated
September 2,2003,entitled "Exploration of the Navidad Silver-Copper-Lead
Property December 2002 to May 2003, Chubut Province, Argentina". This report has
been SEDAR filed and provides a detailed description of all significant
geological work completed to date on the project.
Bonanza-grade structures have been mapped and sampled at Navidad Hill over an
area of 475 metres long by 60 to 140 metres wide. Within this area 636
cumulative metres of structures have been mapped and sampled in detail with 119
measured rock chip samples. Widths of the mapped bonanza-grade structures are
variable, ranging from less than one metre to 3.3 metres. An average width
cannot yet be determined due to soil cover that often obscures the contacts.
Sampling of bonanza-grade structures has returned a length-weighted average of
5,546 g/t silver (162 oz/t), 3.79% copper and 9.84% lead.
Also at Navidad Hill, mapping suggests carapace breccia-hosted mineralization is
the predominant rock type in three areas of 50 by 150 metres, 18 by 20 metres,
and 20 by 25 metres, respectively. 50 measured rock chip samples have returned a
length weighted average grade of 3,785 g/t siler (110.5 oz/t), 3.72% copper, and
2.07% lead.
At Galena Hill, significant zones of galena matrix breccia and mineralized
carapace breccia have been defined. Galena matrix breccia has been defined and
sampled in detail over an area of 475 by up to 90 metres; 101 measured
continuous chip and panel samples have returned a length-weighted average of 147
g/t silver (4.3 oz/t) and 7.69% lead. The true thickness of this mineralized
body is unknown at present, however, pole-dipole IP (discussed below) suggests
that chargeability anomalies which correlate with mapped mineralization on
surface extend to depths of 100 to 300 metres. Mineralized carapace breccia has
been defined over two areas at Galena Hill measuring 118 x 46 metres and 55 x 16
metres; and 23 rock chip samples give a length-weighted average of 2,222 g/t
silver (64.9 oz/t), 0.84% copper, and
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
2.93% lead. Silver-copper bearing carapace breccias at Galena and Navidad Hills
are separated by 600 metres most of which is overburden covered. Metal zoning
suggests this covered area is the centre of the mineralized system.
On Barite Hill, numerous zones of galena matrix breccia have been mapped and
sampled. Due to poor exposure, numerous samples of subcrop and float have been
taken and have been used to define the size of mineralized areas, however, only
representative measured chip samples from outcropping and hand trenched areas
have been used to define the length-weighted averages reported here. 67 chip
samples have been taken giving a length weighted average of 109 g/t silver (3.18
oz/t) and 4.73% lead. Several mineralized zones have been defined with a
cumulative strike length of approximately 1,300 metres and a currently unknown
width.
ROCK CHIP SAMPLE RESULTS
NUMBER
OF SIZE OF SILVER SILVER COPPER LEAD
MINERALIZATION STYLE SAMPLES MINERALIZED AREA (oz/t) (g/t) (%) (%)
NAVIDAD HILL AREA
Bonanza Grade Structures 119 475 x 60-140m; 162.0 5,546 3.79 9.84
636 cumulative metres of
structures
Mineralized Carapace Breccia 50 50x150, 20x25 and 18x20m 110.5 3,785 3.72 2.07
GALENA HILL AREA
Mineralized Carapace Breccia 23 118x46 and 55x16m 64.9 2,222 0.84 2.93
Galena Matrix Breccia 101 475x90m 4.3 147 0.01 7.69
BARITE HILL AREA
Galena Matrix Breccia 67 Several zones with cumulative 3.2 109 0.01 4.73
(Measured chip samples only) strike length of approximately
1,300m
Galena-matrix Breccia 15 As above 3.9 132 0.15 7.25
(Subcrop and float samples)
A soil sample grid has been completed covering the entire Navidad Ridge area and
encompassing a strike length of 5.8 kilometres. Lines were oriented north-south
and spaced at 100 metres with samples collected at 50 metre intervals along
these lines over most of the grid. In areas of particular interest samples were
collected on a 50 by 50 metre grid. In total, 958 soil samples were collected
including approximately 10% duplicate and blank samples collected in order to
assess laboratory quality. All samples were analyzed by ALS Chemex by ICP and AA
techniques. Sample collection was overseen by Dr. Paul Lhotka, P.Geo., the
Company's Qualified Person on the Navidad Project. Review of the data for blanks
and duplicate samples indicates no contamination or reproducibility problems
were encountered.
Highlights of the soil survey include a 1,700 by 300 metre silver-copper-lead
anomaly over the Navidad Hill and Galena Hill areas. This soil anomaly is
defined by greater than 2 ppm (parts per million) silver and generally greater
than 100 ppm copper. Within this zone there is a central core of greater than 10
ppm silver in soils (includes values of up to 298 ppm Ag) of approximately 600
by 200 metres. Portions of this central core correlate with the outcropping
bonanza- grade structures at Navidad Hill and these soil results demonstrate the
potential to expand this zone significantly. Significant soil anomalies also
exist at Barite and Calcite Hills. Silver values of up to 531 ppm have been
received from
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
outside areas of known high-grade mineralization and show excellent potential
for additional discoveries. Lead values are consistently elevated and correlate
well with silver over the entire 5.8 kilometre survey length. Samples of greater
than 500 ppm lead have been returned from every line within the survey area.
Induced Polarization (IP) geophysical surveys utilizing both gradient array and
pole-dipole arrays have been completed at the Navidad Project. Gradient IP
totalling 80.3 line kilometres was performed over an area of 2.5 by 6.2
kilometers with 200 metre spaced lines, including the entire Navidad system and
adjacent covered areas. Follow-up time domain Pole-Dipole IP (using dipole
lengths of 20 and 100 metres) was performed over 8.5 line kilometres covering
areas of anomalous chargeability defined by the gradient array survey. The IP
surveys were performed by Quantec Geoscience Ltd.
The IP surveys have identified a chargeability anomaly with a surface footprint
of 1.6 km x 1.3 km that starts near surface in areas of exposed mineralization
at Galena Hill and in some cases extends to depths of approximately 300 metres.
Pole-dipole survey results show an excellent correlation between chargeability
and mapped exposures of more intense examples of galena matrix breccia
mineralization. The large chargeability anomaly extends over 1 km to the
southwest of known mineralization in an area completely obscured by soil cover.
Chargeability anomalies are generally caused by minerals such as: base-metal
sulphides, pyrite, graphite, hematite and magnetite. Pyrite, graphite, hematite,
and magnetite have not been observed on surface at Navidad in quantities that
could explain the anomaly.
A magnetic geophysical survey was performed by Quantec Geoscience and covers the
entire Navidad grid (7.2 x 2.5 km) totalling 88.7 line kilometres (including a
6.2km tie line). Data was collected at 10m intervals along lines spaced 200m
apart. Quantec made standard corrections for diurnal variations and produced
plan maps of the total field magnetic data and pole reduced data. Mapped
mineralization at Navidad, Galena, and Barite Hills is not associated with
magnetic anomalies nor is the IP chargeability anomaly. The area of the large
gradient and pole-dipole IP chargeability anomaly is characterized by a low,
flat magnetic response that indicates magnetite is not the source of the
chargeability anomaly.
The final geophysical survey performed at the Navidad Project measured subtle
differences in the earth's gravitational field. Once appropriate corrections
have been applied, results of these gravity measurements are indicative of
contrasting densities in the rock underlying the survey area. Laboratory tests
of mineralized and unmineralized specimens from the Navidad project indicate
that densities of unmineralized rocks range from 2.19 to 2.64 g/cm3 while
mineralized rocks range from 2.63 to 3.95 g/cm3. Gravity data acquisition was
performed by Proingeo S. A., an Argentine geophysical and topographic survey
contractor. Quantec Geoscience provided consulting services to the Company on
survey design and execution, has reviewed data quality, and built a three
dimensional model of the survey results using the University of British Columbia
(Canada) inversion software. Quantec Geoscience reports raw data quality is very
good. The gravity survey covers an area of approximately 2.2 by 2.5 km centred
on the previously reported IP chargeability anomaly. It includes 385 gravity
stations that were measured on two lines with closely spaced points and
additional points spaced at about 100 by 200m intervals.
In the Galena Hill area, the gravity survey has defined an important anomaly
with multiple peaks approximately 0.8 x 1.1 km in size. This anomaly has a
"donut-like" form with a central low surrounded by higher density values;
amplitude of this anomaly is approximately 0.6 to 0.8 milligals above
surrounding values. This complex anomaly is partly coincident with, but somewhat
smaller in size, than the previously announced Gradient and Pole-Dipole I.P.
chargeability anomaly at Navidad. The anomaly is not reasonably explained by
simple lithologic density variations and is most readily explained by the
presence of sulphide/barite mineralization. Part of the gravity anomaly is
spatially associated with mapped breccia-hosted mineralization on surface and it
correlates very well with potential extensions to this mineralization indicated
by the most intense Pole-Dipole IP chargeability anomaly.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
A second gravity high of approximately 260 by 550m in diameter is spatially
associated with mapped Bonanza Grade Structures at Navidad Hill. This anomaly
may be caused by the combination of sulphide mineralization and the denser host
rock of the flow dome at Navidad Hill relative to surrounding sediments. It
covers the portion of the flow dome known to host Bonanza Grade Structures and
their strike extension. Most of the rest of the flow dome is not represented by
a gravity high.
In review, important amounts and grades of silver-copper-lead mineralization are
exposed from Navidad Hill to Barite Hill a distance of over 2,900m. Detailed
mapping and sampling has confirmed the importance of the original discovery
announcement of February 3, 2003. The outcropping mineralization is accompanied
by a soil geochemical anomaly of over 5.8km long and a large IP chargeability
anomaly portions of which show anomalously high gravity values.
Planned work on the Navidad Project includes a significant diamond drill program
and minor additional surface work. The diamond drill program is now underway and
will include 2 phases of 3,000 metre each of HQ coring predominantly at Navidad
and Galena Hills. US $1,500,000 is budgeted for the Phase I and II drilling at
the Navidad Project.
LAS BAYAS PROJECT
In January, 2003 the Company undertook a diamond drill program on it's 100%
owned Las Bayas project. The purpose of this program was to test for potentially
economic grades of gold and silver hosted within low-sulphidation quartz veins
that are well exposed on surface. Prior surface work by the Company had
delineated over 15,000 linear metres of quartz veining within an area of
approximately 1.5 by 4.0 kilometres. Vein widths at surface range from less than
one metre to 22 metres and gold grades range from less than detection limit to
25.8 grams/tonne. The drill program comprised 1,953 metres of NQ core that was
recovered from 19 drill holes targeting six individual veins. Total cost of this
program was CDN $385,000.
Eighteen of the 19 drill holes completed intersected the targeted
low-sulphidation quartz veins; these intersections ranged in width from 0.4 to
22.1 metres of vein material. This drilling tested approximately 900 metres of
the mapped 15,000 metre strike length of veins exposed at Las Bayas Hill.
Highlights of the assay results are tabulated below:
GOLD
EQUIVALENT
DDH LENGTH GOLD SILVER (Au+Ag/70)
(m) (g/t) (g/t) (g/t)
LB03-01 5.1 0.96 36.9 1.48
including 1.3 2.62 33.0 3.09
LB03-03 1.29 0.68 59.8 1.53
LB03-05 5.0 0.73 51.5 1.47
including 2.0 1.48 101.9 2.93
LB03-07 0.7 1.02 3.6 1.07
The remaining drill holes intersected gold grades ranging from below detection
to 0.86 grams/tonne. Although results fell short of expectations, it must be
emphasized that only 900 linear metres of veining were tested by this program
and approximately 14,100 linear metres remain untested. The Company has no
immediate plans for further work on the Las Bayas property, however an
additional surface program is recommended on the outlying portions of the
property that as yet remain completely untested.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
Dr. Paul Lhotka, the Company's "Qualified Person" for the Las Bayas project has
provided the Company a NI 43-101 report dated September 15,2003, on the project
entitled "Exploration of the Las Bayas Gold-Silver Property, August 2002 to
February 2003, Chubut Province, Argentina". This report has been SEDAR filed and
provides a detailed description of all significant geological work completed to
date on the project.
OTHER
The Company has no exploration budget commitment for the Other - San Juan region
in Argentina.
ACQUISITIONS AND FARM-OUTS
The Company continues to be quite active in Chubut province reviewing other
properties and conducting due diligence, with the objective of acquiring
additional prospective properties.
The Company has developed a business plan to have exploration work done on its
non-core properties by way of farm- outs. The Company will be able to have
exploration done on its non-core properties, while focusing its exploration
resources on its core Navidad property.
b) PERU
RIO TABACONAS
As a result of extremely encouraging results from the Phase I drill program in
the fall of 2001, a Phase II drill program was developed and $1.2 million was
raised in April 2002, through a Short Form Offering, to fund further exploration
on the property.
In June 2002, the Company announced it would take a more measured approach to
exploration on the project to ensure that local cultural, developmental and
environmental concerns pertaining to mining activities in the region would be
addressed. All exploration activities have been deferred until an agreement with
the local community of Tamborapa can be finalized. The Company has declared
force majeure, as allowed under the property option agreement. A
Company-Community plan has been prepared with the aid of several Peruvian social
economic consultants and has been presented for discussion to the community
leaders, government officials and interested party leaders and as of the date of
this quarterly report no agreement has been reached. Thus the Company will
continue to work with the various social economic consultants to develop a plan
which will be acceptable by all parties in the community of Tabaconas.
During the nine months ended September 30, 2003, no drilling work has been
initiated and the Company has spent $426,795, the majority of which has been for
maintaining the properties in good standing, legal costs, social economic
consultants and our Peruvian administrative and field staff assisting in
developing the Company's community plan. Until then the Company cannot proceed
with any work programs on the property. Up to December 31, 2002, the Company
spent $862,736 on this property for a total of $1,132,750. The balance of the
funds allocated in the Short Form, of $67,250 have been allocated for general
exploration activities.
SUMMARY OF FINANCIAL RESULTS
For the nine months ended September 30,2003, the Company reported a consolidated
loss of $1,279,920 ($0.04 per share) compared to a loss of $953,158 ($0.04 per
share) for the comparative period in 2002. The increase in the loss experienced
by the Company in 2003, compared to 2002, was attributed to increases in certain
operating expenditures
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
such as $84,887 for corporate development and investor relations, $94,610 for
cost associated with the cancelled financing, $61,302 for general exploration,
$18,482 for office sundry, $24,382 for printing, $346,080 for stock-based
compensation and $9,212 for transfer agent and regulatory fees.
RESULTS OF OPERATIONS
CORPORATE COSTS AND OTHER INCOME
The directors provided services to the Company and were paid $249,600 for the
nine months ended September 30, 2003. Mr. W. Lee, the CFO, was paid a salary of
$54,000, Mr. N. Cacos, the Corporate Secretary was paid management fees of
$49,500, Mr. Sean Hurd, director and investor relations manager, was paid
management fees of $36,000, Mr. R. Brown, a former director, was paid a
consulting fee of $1,200 during his tenure as a director, Mr. G. Carlsen,
Chairman of the Board was paid consulting fees of $32,400 and Mr. J. Grosso, the
President and CEO, was paid management fees of $76,500.
The significant increases in expenditures this period versus prior period are as
follows: (i) corporate development and investor relations - $84,887 of which
$32,690 was for the New York Gold Show and market awareness meetings in
Edmonton, Calgary and Toronto, $12,650 was for a three month coverage on a
website "Savvy Investor.com", $ 9,900 for various media advertising, $5,347 was
for the Annual General Meeting presentation, $ 20,500 for the PDAC in Toronto
and $ 3,800 for the Cambridge House Gold Conference; (ii) cost associated with
cancelled financing - $94,610 of which $17,500 was paid to the TSX Venture
exchange, $5,300 to ComputerShare Trust Company of Canada, $21,810 to Catalyst
Corporate Finance Lawyers and $50,000 accrued for Cassels Brock & Blackwell LLP;
(iii) general exploration - $61,302 as a result of additional examination of
grassroots properties in the Patagonia region in Argentina and in Peru; (iv)
office and sundry - $18,482 of which $2,300 was for computer software, $2,570
for a laptop computer, $2,900 to Pitney works - postage; (v) printing - $24,382
to Rustica Edit Ltd. for graphic design and printing of shareholder information
packages (vi) transfer agent and regulatory fee - $9,212 mainly due to increase
in TSX Venture Exchange filing fees for private placements, stock option plan
and exercise of warrants.
The following expenses decreased for the period: (i) Professional fees - $ 8,585
as $33,016 was related to the North America and Europe Market awareness program
in the prior year; (ii) Rent, parking and storage - $13,819 as a result of cost
recovery from a private company sharing office space; (iii) Travel and
accommodation - $25,662 as $32,580 was incurred in the prior year for the North
America and Europe market awareness program.
During the period ended September 30, 2003 and 2002 the Company did not
write-off any mineral claims and deferred costs.
The Company recorded a gain of $234,848 on the disposition of the Penascudo
Property and related deferred costs as a result of receiving 500,000 shares from
Ballad under the option agreement
Interest and miscellaneous income reported for the period ended September
30,2003 was $44,501 an increase of $28,806 from $15,695 reported in 2002, as a
result of more funds on deposit.
During the period ended September 30,2003 and 2002, the Company did not dispose
of any Viceroy common shares. Through a plan of arrangement completed after June
30, 2003, the 195,500 Viceroy common shares held as marketable securities were
converted to 65,166 Quest Capital Corp. Class A shares , symbol QC.A on the TSX
Exchange, 6,516 Spectrum Gold Inc. common shares and 19,550 Viceroy Exploration
Inc. common shares.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2003 the Company had working capital of $4,626,438 compared to
$2,112,952 at September 30, 2002. As at September 30, 2003, the Company had cash
and cash equivalents on hand of $4,346,295 (2002 - $2,086,820). Subsequent to
the period ended September 30,2003 the Company issued 703,875 shares for
$463,368 on the exercises of options and warrants.
The Company has accounts receivable and prepaids of $130,175, prepaids comprise
$28,989 and the balance of $101,186 represents receivables all of which are
fully collectible with $49,063 being GST receivable $20,678 accrued interest
receivable, $17,490 deposit in brokerage firm and the balance being
miscellaneous.
The Company considers that it does have adequate resources to maintain its
ongoing operations and property commitments for the year. The Company may
require additional financing if it proceeds with further planned exploration and
property acquisitions for the remainder of fiscal 2003. The Company will
continue to rely on successfully completing additional equity financing and/or
conducting joint venture arrangements to further exploration on its properties.
There can be no assurance that the Company will be successful in obtaining
additional financing or negotiating joint venture agreements.
OPERATING CASH FLOW
Cash outflow from operating activities for the period ended September 30,2003,
was $1,187,423 compared to cash outflow in 2002 of $986,981. The cash outflows
for 2003 were largely due to increases in corporate development and investor
relations, cost associated with a cancelled financing , office sundry, printing,
general exploration, stock based compensation and transfer agent and regulatory
fees as explained above.
FINANCING ACTIVITIES
Cash flow from financing activities for the period ended September 30, 2003,
generated $5,492,885(2002 - $3,264,327) which included $638,774 from the
exercise of 1,474,750 stock options and $2,361,586 from the exercise of
4,133,477 warrants. Subsequent to the period ended September 30, 2003, the
Company issued 703,875 shares for $463,368 on the exercise of options and
warrants.
INVESTING ACTIVITIES
Cash flow from investing activities required $1,395,291 for the period ended
September 30,2003 (2002 - $946,291), these investing activities were primarily
for additions of $939,825 (2002 - $207,772) to Chubut and other properties in
Argentina and $426,795 (2002 - $730,693 to the Rio Tabaconas project in Peru)
and $13,519 (2002 - $7,826) to office equipment.
CRITICAL ACCOUNTING POLICIES
Reference should be made to the Company's significant accounting policies
contained in Note 2 of the Company's consolidated financial statements for the
year ended December 31, 2002. These accounting policies can have a significant
impact of the financial performance and financial position of the Company.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
USE OF ESTIMATES
The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the period. Significant areas requiring the use of
management estimates relate to the determination of environmental obligations
and impairment of mineral properties and deferred costs. Actual results may
differ from these estimates.
MINERAL PROPERTIES AND DEFERRED COSTS
Consistent with the Company's accounting policy disclosed in Note 3 of the
annual consolidated financial statements, direct costs related to the
acquisition and exploration of mineral properties held or controlled by the
Company have been capitalized on an individual property basis. It is the
Company's policy to expense any exploration associated costs not related to
specific projects or properties. Management of the Company periodically reviews
the recoverability of the capitalized mineral properties. Management takes into
consideration various information including, but not limited to, results of
exploration activities conducted to date, estimated future metal prices, and
reports and opinions of outside geologists, mine engineers and consultants. When
it is determined that a project or property will be abandoned or its carrying
value has been impaired, a provision is made for any expected loss on the
project or property.
RISK FACTORS
The Company's operations and results are subject to a number of different risks
at any given time. These factors, include but are not limited to disclosure
regarding exploration, additional financing, project delay, titles to
properties, price fluctuations and share price volatility, operating hazards,
insurable risks and limitations of insurance, management, foreign country and
regulatory requirements, currency fluctuations and environmental regulations
risks. For a full understanding of these risks and others, reference should be
made to the Company's "Annual Information Form".
INVESTOR RELATIONS
The Company currently does not engage any outside investor relations consultant.
Mr. Sean Hurd, a director, is the Company's Investor Relations Manager and
coordinates investor relations activities. However, during the period ended
September 30, 2003 the Company, under a month to month agreement, retained Raven
Capital, a private company owned and managed by Jack Barnes to provide public
relations and consulting primarily targeted to the North American financial and
investment community. Raven Capital has been in the investor relations business
since 1999 providing similar services to public companies. Raven Capital was
paid $7,500 for January, $3,750 per month for February and March and $7,275 per
month for April and May 2003.